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Qwest (Q:NYSE) expanded the scope of its ongoing earnings restatement in a move that the company hopes will satisfy the federal investigators.

The big Denver telco Sunday night boosted to nearly $1.5 billion the amount of revenue it may reverse in a restatement of reported earnings over the period 1999-2001, as it reconsiders its accounting for so-called optical capacity swaps.

The company, which in July set plans to reduce revenue by $1.16 billion over the 1999-2001 period due to accounting irregularities, said Sunday that it had identified additional transactions for which restatements might be necessary. The company said it had located some $950 million in revenue and costs that might have to be reversed, though it noted that that figure may include some of July's estimate as well.

The restatements revolve around a telecom bubble-era practice known as swaps, short for swapping network capacity with competitors. Some analysts and industry insiders say these so-called indefeasible-right-of-use leases, or IRUs, helped Qwest pad not only its top line but its cash flow as well.

explored the issue in previous stories.

Qwest has been under the cloud of a number of regulatory and criminal investigations regarding its business and accounting practices. But it expressed hope that the ongoing internal accounting probe might help to calm some of the feds' concerns. "Although the company has not had discussions with the staff of the SEC about resolution of the investigation, Qwest is optimistic that today's announcement represents a first step toward a possible resolution," the company said Sunday night.

Hope that the company will reach a deal with investigators and declining worries over its liquidity situation have pushed the stock higher in recent months. After wilting below the $2 mark early in the summer, Qwest has recovered to trade around $3 recently. It closed Friday at $2.85.